MONTREAL, July 09, 2020 (GLOBE NEWSWIRE) -- Velan Inc. (TSX: VLN) (the "Company"), a world-leading manufacturer of industrial valves, announced today its financial results for its first quarter ended May 31, 2020.
Highlights
Three-month periods ended | ||
May 31, | May 31, | |
(millions of U.S. dollars, excluding per share amounts) | 2020 | 2019 |
Sales | $76.7 | $83.8 |
Gross Profit | 18.4 | 16.1 |
Gross profit % | 24.0% | 19.2% |
Net loss1 | 1.9 | 5.8 |
Net loss1 per share ? basic and diluted | 0.09 | 0.27 |
Operating profit (loss) before restructuring and transformation costs2 | 0.7 | (6.8) |
Adjusted EBITDA2 | 3.8 | (3.8) |
Adjusted EBITDA2 per share ? basic and diluted | 0.18 | (0.18) |
First Quarter Fiscal 2021 (unless otherwise noted, all amounts are in U.S. dollars and all comparisons are to the first quarter of fiscal 2020):
"Our first quarter presented us with a unique set of challenges related to global COVID-19 pandemic and to the rapid drop in the price of oil," said Réjean Ostiguy, CFO of Velan Inc. "While it did have a negative impact on our quarterly sales, we managed our margins and reduced administration costs so as to come close to an operating breakeven, even when including our restructuring and transformation costs. We took actions to protect our cash and balance sheet by suspending dividends, temporarily rolling back wages, applying for COVID-19 subsidies and completing the refinancing of our North American operations."
Yves Leduc, CEO of Velan Inc., said, "As supplier of critical equipment to essential industries, we were spared the harshest consequences of the global recession that struck early in the quarter, and we responded extremely swiftly in protecting our employees and ensuring the continuity of our global supply chain, while delivering much improved results over last year. Going forward, we are advantaged by a healthy and well-balanced business portfolio, the accelerated margin growth under our V20 plan, as well as the broad set of recent measures that have increased our company's resilience and agility. These are hard times but there is business momentum, and, more importantly, our employees, with whom Bruno and I have communicated every single week since the pandemic broke out, are responding admirably well to the challenge. I thank them for their resolve and leadership."
Dividend
At the end of the fiscal year ended February 29, 2020, the Board of Directors deemed appropriate to suspend the quarterly dividend. The decision remains unchanged and will be reviewed on a quarterly basis.
Conference call
Financial analysts, shareholders, and other interested individuals are invited to attend the first quarter conference call to be held on Friday, July 10, 2020, at 11:00 a.m. (EDT). The toll free call-in number is 1-800-905-9496, access code 21965457. A recording of this conference call will be available for seven days at 1-416-626-4144 or 1-800-997-6910, access code 21965457.
About Velan
Founded in Montreal in 1950, Velan Inc. (www.velan.com) is one of the world's leading manufacturers of industrial valves, with sales of US$371.6 million in its last reported fiscal year. The Company employs over 1,775 people and has manufacturing plants in 9 countries. Velan Inc. is a public company with its shares listed on the Toronto Stock Exchange under the symbol VLN.
Safe harbour statement
This news release may include forward-looking statements, which generally contain words like "should", "believe", "anticipate", "plan", "may", "will", "expect", "intend", "continue" or "estimate" or the negatives of these terms or variations of them or similar expressions, all of which are subject to risks and uncertainties, which are disclosed in the Company's filings with the appropriate securities commissions. While these statements are based on management's assumptions regarding historical trends, current conditions and expected future developments, as well as other factors that it believes are reasonable and appropriate in the circumstances, no forward-looking statement can be guaranteed and actual future results may differ materially from those expressed herein. The Company disclaims any intention or obligation to update or revise any forward-looking statements contained herein whether as a result of new information, future events or otherwise, except as required by the applicable securities laws. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Non-IFRS measures
In this press release, the Company presented measures of performance and financial condition that are not defined under International Financial Reporting Standards ("non-IFRS measures") and are therefore unlikely to be comparable to similar measures presented by other companies. These measures are used by management in assessing the operating results and financial condition of the Company. In addition, they provide readers of the Company's consolidated financial statements with enhanced understanding of its results and financial condition, and increase transparency and clarity into the operating results of its core business. Reconciliations of these measures can be found on the following page.
Operating profit (loss) before restructuring and transformation costs and Adjusted net earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA")
Three-month period ended May 31, | Three-month period ended May 31, | |
2020 | 2019 | |
Operating loss | (0.5) | (7.3) |
Adjustment for: | ||
Restructuring and transformation costs | 1.2 | 0.5 |
Operating profit (loss) before restructuring and transformation costs | 0.7 | (6.8) |
Net loss1 | (1.9) | (5.8) |
Adjustments for: | ||
Depreciation of property, plant and equipment | 2.5 | 2.6 |
Amortization of intangible assets | 0.6 | 0.4 |
Finance costs ? net | 0.3 | 0.3 |
Income taxes | 1.1 | (1.8) |
EBITDA | 2.6 | (4.3) |
Adjustment for: | ||
Restructuring and transformation costs | 1.2 | 0.5 |
Adjusted EBITDA | 3.8 | (3.8) |
The term "operating profit or loss before restructuring and transformation costs" is defined as operating profit or loss plus restructuring and transformation costs. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
The term "adjusted EBITDA" is defined as net income or loss attributable to Subordinate and Multiple Voting Shares plus restructuring and transformation costs, depreciation of property, plant & equipment, plus amortization of intangible assets, plus net finance costs plus income tax provision. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
__________________________
1 Net earnings or loss refers to net income or loss attributable to Subordinate and Multiple Voting Shares.
2 Non-IFRS measures ? see explanation above.
Velan Inc. | ||
Condensed Interim Consolidated Statements of Financial Position | ||
(Unaudited) | ||
(in thousands of U.S. dollars) | ||
As At | May 31, | February 29, |
2020 | 2020 | |
$ | $ | |
Assets | ||
Current assets | ||
Cash and cash equivalents | 84,426 | 75,327 |
Short-term investments | 1,764 | 627 |
Accounts receivable | 117,312 | 135,242 |
Income taxes recoverable | 7,980 | 8,747 |
Inventories | 166,042 | 170,265 |
Deposits and prepaid expenses | 6,217 | 5,191 |
Derivative assets | 124 | 555 |
Assets held for sale | 3,512 | - |
387,377 | 395,954 | |
Non-current assets | ||
Property, plant and equipment | 94,661 | 98,179 |
Intangible assets and goodwill | 17,036 | 17,148 |
Deferred income taxes | 25,986 | 26,702 |
Other assets | 529 | 513 |
138,212 | 142,542 | |
Total assets | 525,589 | 538,496 |
Liabilities | ||
Current liabilities | ||
Bank indebtedness | 39,786 | 44,317 |
Short-term bank loans | 397 | 1,379 |
Accounts payable and accrued liabilities | 63,893 | 74,271 |
Income taxes payable | 1,965 | 1,493 |
Customer deposits | 51,086 | 47,208 |
Provisions | 15,608 | 14,963 |
Provision for performance guarantees | 20,604 | 21,127 |
Derivative liabilities | 2,006 | 1,169 |
Current portion of long-term lease liabilities | 1,617 | 1,621 |
Current portion of long-term debt | 8,013 | 8,311 |
204,975 | 215,859 | |
Non-current liabilities | ||
Long-term lease liabilities | 13,729 | 13,722 |
Long-term debt | 10,410 | 10,986 |
Income taxes payable | 1,576 | 1,576 |
Deferred income taxes | 2,758 | 2,869 |
Other liabilities | 8,280 | 8,623 |
36,753 | 37,776 | |
Total liabilities | 241,728 | 253,635 |
Total equity | 283,861 | 284,861 |
Total liabilities and equity | 525,589 | 538,496 |
Velan Inc. | ||||
Condensed Interim Consolidated Statements of Loss | ||||
(Unaudited) | ||||
(in thousands of U.S. dollars, excluding number of shares and per share amounts) | ||||
Three-month periods ended May 31 | ||||
2020 | 2019 | |||
$ | $ | |||
Sales | 76,653 | 83,816 | ||
Cost of sales | 58,261 | 67,722 | ||
Gross profit | 18,392 | 16,094 | ||
Administration costs | 17,667 | 22,954 | ||
Restructuring and transformation costs | 1,176 | 509 | ||
Other expense (income) | 24 | (57 | ) | |
Operating loss | (475 | ) | (7,312 | ) |
Finance income | 116 | 140 | ||
Finance costs | 434 | 467 | ||
Finance costs ? net | (318 | ) | (327 | ) |
Loss before income taxes | (793 | ) | (7,639 | ) |
Income Taxes | 1,113 | (1,819 | ) | |
Net loss for the period | (1,906 | ) | (5,820 | ) |
Net loss attributable to: | ||||
Subordinate Voting Shares and Multiple Voting Shares | (1,886 | ) | (5,824 | ) |
Non-controlling interest | (20 | ) | 4 | |
(1,906 | ) | (5,820 | ) | |
Net loss per Subordinate and Multiple Voting Share | ||||
Basic | (0.09 | ) | (0.27 | ) |
Diluted | (0.09 | ) | (0.27 | ) |
Dividends declared per Subordinate and Multiple Voting Share | - | 0.02 | ||
(CA$ - ) | (CA$0.03) | |||
Total weighted average number of Subordinate and Multiple Voting Shares | ||||
Basic | 21,585,635 | 21,621,935 | ||
Diluted | 21,585,635 | 21,621,935 | ||
Velan Inc. | ||||
Condensed Interim Consolidated Statements of Comprehensive Loss | ||||
(Unaudited) | ||||
(in thousands of U.S. dollars) | ||||
Three-month periods ended May 31 | ||||
2020 | 2019 | |||
$ | $ | |||
Comprehensive loss | ||||
Net loss for the period | (1,906 | ) | (5,820 | ) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment on foreign operations whose functional currency is other than the reporting currency (U.S. dollar) | 906 | (2,851 | ) | |
Comprehensive loss | (1,000 | ) | (8,671 | ) |
Comprehensive loss attributable to: | ||||
Subordinate Voting Shares and Multiple Voting Shares | (930 | ) | (8,537 | ) |
Non-controlling interest | (70 | ) | (134 | ) |
(1,000 | ) | (8,671 | ) | |
Other comprehensive income (loss) is composed solely of items that may be reclassified subsequently to the consolidated statement of loss. | ||||
Velan Inc. | |||||||||||||
Condensed Interim Consolidated Statements of Changes in Equity | |||||||||||||
(Unaudited) | |||||||||||||
(in thousands of U.S. dollars, excluding number of shares) | |||||||||||||
Equity attributable to the Subordinate and Multiple Voting shareholders | |||||||||||||
Number of shares | Share capital | Contributed surplus | Accumulated other comprehensive income (loss) | Retained earnings | Total | Non- controlling interest | Total equity | ||||||
Balance - February 28, 2019 | 21,621,935 | 73,090 | 6,074 | (28,990 | ) | 254,606 | 304,780 | 4,053 | 308,833 | ||||
Net loss for the year | - | - | - | - | (5,824 | ) | (5,824 | ) | 4 | (5,820 | ) | ||
Other comprehensive loss | - | - | - | (2,713 | ) | - | (2,713 | ) | (138 | ) | (2,851 | ) | |
Effect of share-based compensation | - | - | 1 | - | - | 1 | - | 1 | |||||
Dividends | |||||||||||||
Multiple Voting Shares | - | - | - | - | (346 | ) | (346 | ) | - | (346 | ) | ||
Subordinate Voting Shares | - | - | - | - | (135 | ) | (135 | ) | - | (135 | ) | ||
Balance - May 31, 2019 | 21,621,935 | 73,090 | 6,075 | (31,703 | ) | 248,301 | 295,763 | 3,919 | 299,682 | ||||
Balance - February 29, 2020 | 21,585,635 | 72,695 | 6,260 | (34,047 | ) | 236,269 | 281,177 | 3,684 | 284,861 | ||||
Net loss for the year | - | - | - | - | (1,886 | ) | (1,886 | ) | (20 | ) | (1,906 | ) | |
Other comprehensive income (loss) | - | - | - | 956 | - | 956 | (50 | ) | 906 | ||||
Balance - May 31, 2020 | 21,585,635 | 72,695 | 6,260 | (33,091 | ) | 234,383 | 280,247 | 3,614 | 283,861 | ||||
Velan Inc. | ||||
Condensed Interim Consolidated Statements of Cash Flow | ||||
(Unaudited) | ||||
(in thousands of U.S. dollars) | ||||
Three-month periods ended May 31 | ||||
2020 | 2019 | |||
$ | $ | |||
Cash flows from | ||||
Operating activities | ||||
Net loss for the period | (1,906 | ) | (5,820 | ) |
Adjustments to reconcile net loss to cash provided by operating activities | 4,626 | 2,683 | ||
Changes in non-cash working capital items | 16,523 | 4,859 | ||
Cash provided by operating activities | 19,243 | 1,722 | ||
Investing activities | ||||
Short-term investments | (1,137 | ) | (4 | ) |
Additions to property, plant and equipment | (2,531 | ) | (748 | ) |
Additions to intangible assets | (257 | ) | (22 | ) |
Proceeds on disposal of property, plant and equipment, and intangible assets intangible assets | 40 | 32 | ||
Net change in other assets | (22 | ) | 13 | |
Cash used by investing activities | (3,907 | ) | (729 | ) |
Financing activities | ||||
Dividends paid to Subordinate and Multiple Voting shareholders | (482 | ) | (476 | ) |
Short-term bank loans | (982 | ) | (439 | ) |
Repayment of long-term debt | (759 | ) | (716 | ) |
Repayment of long-term lease liabilities | (431 | ) | (396 | ) |
Cash used by financing activities | (2,654 | ) | (2,027 | ) |
Effect of exchange rate differences on cash | 948 | (435 | ) | |
Net change in cash during the period | 13,630 | (1,469 | ) | |
Net cash ? Beginning of the period | 31,010 | 40,866 | ||
Net cash ? End of the period | 44,640 | 39,397 | ||
Net cash is composed of: | ||||
Cash and cash equivalents | 84,426 | 72,597 | ||
Bank indebtedness | (39,786 | ) | (33,200 | ) |
44,640 | 39,397 | |||
Supplementary information | ||||
Interest received (paid) | (348 | ) | 279 | |
Income taxes reimbursed (paid) | (555 | ) | 1,831 | |
For further information please contact:
Yves Leduc, Chief Executive Officer
or
Réjean Ostiguy, Chief Financial Officer
Tel: (514) 748-7743
Fax: (514) 748-8635
Web: www.velan.com
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